Demand for gold vehicles soars in Q3

Gold ETFs and similar products witnessed inflows of 77.6 tonnes in the third quarter of 2011, which was 58% above year-earlier levels of 49.1 tonnes.

According to the World Gold Council's Gold Demand Trends report for Q3 2011, total gold demand in the third quarter of 2011 reached 1,053.9 tonnes; an increase of 6% compared to the same period last year.

Overall gold demand for the quarter equates to US$57.7bn, an all-time high in value terms.

The increase was driven by investment demand which rose 33% year-on-year to 468.1 tonnes, generating record quarterly demand of US$25.6bn.

Investment demand in Europe reached a record quarterly value of €4.6bn, equating to 118.1 tonnes - a year-on-year increase of 135%.

The report said this increase in overall investment demand was all the more impressive given the sharp gold price correction in September, which encouraged a wave of profit taking among bar and coin investors.

China's growing appetite for gold as a means of investment saw demand for gold bars and coins in the country expand by 24% from year earlier levels to 60.2 tonnes.

Meanwhile, gold supply was 1,034.4 tonnes in Q3, which was 2% higher than year earlier levels of 1,013.0 tonnes.

The quarterly average price rose 39% from year earlier levels to US$1,702.12, while the gold price reached a new record of US$1,895.00 (London PM Fix) on 5 and 6 September.

Marcus Grubb, managing director, investment at the World Gold Council, said: "Unsurprisingly investment demand for gold was a key driver during the third quarter. Increasing levels of inflation, the US credit rating downgrade, a worsening eurozone sovereign debt crisis and the lacklustre performance of many assets drove investors to increase holdings in gold in order to protect their wealth.

"Given gold's proven risk mitigation properties, it is likely that investors will continue to seek protection from economic uncertainty, which shows no signs of abating.

"The long-term fundamentals for gold remain strong with a diverse and growing demand base coupled with constrained supply-side activity."

A copy of the report can be viewed at: www.gold.org/media/.